{"id":85110,"date":"2026-05-04T16:10:02","date_gmt":"2026-05-04T23:10:02","guid":{"rendered":"https:\/\/www.redfin.com\/news\/?p=85110"},"modified":"2026-05-04T16:10:02","modified_gmt":"2026-05-04T23:10:02","slug":"weekly-economic-update-may-4-2026","status":"publish","type":"post","link":"https:\/\/www.redfin.com\/news\/weekly-economic-update-may-4-2026\/","title":{"rendered":"Redfin Economists\u2019 Weekly Take: Volatile Rates Ahead as Fed Turns Hawkish and Energy Shock Builds"},"content":{"rendered":"

This Week In A Nutshell: <\/b>Rates are likely to remain volatile this week. Markets are balancing a still-solid economy against the worsening energy shock, a more hawkish Fed, and Friday\u2019s jobs report.<\/span><\/p>\n

Upcoming Attractions<\/b><\/h3>\n

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The key economic data release this week will be Friday\u2019s April jobs report. Job growth is expected to slow from March\u2019s surprisingly strong pace, with economists looking for about 60-70k new jobs. The unemployment rate is expected to remain at 4.3%. Given recent volatility in the labor market data, one month is unlikely to settle the debate over whether the labor market is weakening meaningfully. But with the Fed increasingly worried about inflation risks from the Iran war, it would probably take a very weak report to increase odds of a Fed rate cut.<\/span><\/p>\n

Before Friday, we\u2019ll also get JOLTS job openings and ISM services on Tuesday, ADP employment on Wednesday, and jobless claims on Thursday. The JOLTS report is expected to show openings edging down again, but the weekly claims data have been surprisingly strong recently and will probably matter more for the market\u2019s read on whether layoffs are actually rising. Fed officials will also be out in force this week, including Kashkari and Hammack, two of the regional bank presidents who dissented at last week\u2019s meeting because they no longer thought the Fed should maintain an easing bias.<\/span><\/p>\n

Any meaningful developments in Middle East peace negotiations or energy markets could very well overshadow all of the economic data.<\/span><\/p>\n

Last Week\u2019s Highlights<\/b><\/h3>\n

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The Q1 GDP and labor market data last week were broadly solid, but Iran war developments and a surprising Fed meeting dominated the headlines. The Middle East conflict continued to put pressure on energy prices. July Brent briefly hit $115 before settling back to $108 and retail gasoline rose to $4.39\/gallon, up 41% from its 2025 average. The longer the conflict drags on, the more likely it is that higher gas prices start to weigh more meaningfully on growth and consumer sentiment.<\/span><\/p>\n

The Fed meeting delivered two surprises. First, three regional Fed presidents\u2014Hammack, Kashkari, and Logan\u2014dissented from the statement because they did not think the Fed should keep signaling that the next move is more likely to be a cut than a hike. Second, Powell said he would stay on the Board of Governors \u201cfor a period of time\u201d after his term as chair ends. That slows the pace at which the White House can reshape the Board. The upshot is that rate cuts look less likely in the near term unless the labor market weakens very clearly.<\/span><\/p>\n

Diving a Little Deeper<\/b><\/h3>\n

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The most important shift from last week is that the Fed is moving from a \u201cwaiting to cut\u201d stance to \u201cwaiting for more clarity on whether to cut or hike.\u201d That feels like a subtle change, but it matters for mortgage rates because long-term rates depend on where investors think the Fed is headed over the next few years.<\/span><\/p>\n

There are three reasons the Fed is getting more cautious:<\/b><\/p>\n